City of Ottawa Sinking Fund December 31, Document 1

Transcription

1 City of Ottawa Sinking Fund December 31, 2008 Document 1

2 To the Mayor and Members of The Council of the City of Ottawa We have audited the statement of financial position of The City of Ottawa Sinking Fund as at December 31, 2008 and the fund balance statement of continuity and the statement of cash flows for the year then ended. These financial statements are the responsibility of the Sinking Fund's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of The City of Ottawa Sinking Fund as at December 31, 2008 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Ottawa, Canada, March 13,2009. Chartered Licensed Accountants Public Accountants Ell ERNST & YOUNG -----A-m-em-be-' t-irm-o-' E-rn-st &-~-ou-nq-gi-oba-' L-im-ite<l------

3 City of Ottawa Sinking Fund Incorporated under the laws of Ontario [in thousands] FINANCIAL ASSETS Cash Cash equivalents Investments [note 2] Accrued interest Total financial liabilities $ $ 554 1,563 11, , ,760 1,941 1, , ,145 FINANCIAL LIABILITIES AND FUND BALANCE Financial liabilities Accounts payable - contributors [note 4] Actuarial requirements [note 3] Fund balance Total financial liabilities and fund balance 2, , , , ,608 15,469 19, , ,145 i!j ERNST& YOUNG -----Amem-t>e-'-';-'m-or-e'-n'-I&-Y-OU-'lQ-GI-Oba-'-L;m-;t-O<!------

4 Year ended December [in thousands] $ $ Fund balance at the beginning of the year 19,537 20,055 Revenue Contribution - levies 9,222 10,472 Investment income 9,837 8,838 19,059 19,310 Expenditures Provision for actuarial requirements 20,749 19,828 Refund to contributors 2,378 23,127 19,828 Net change in fund balance (4,068) (518) Fund balance at the end of the year 15,469 19,537 See accompanying notes Ell ERNST & YOUNG -----Am-.-mbe-'-!ir-m-of-E'-"'-t a-yov-ilq-gl-ot>a-ll-im-itec

5 [in thousands] $ $ OPERATING ACTIVITIES Excess of expenses over revenues for the year (4,068) (518) Deduct non-cash items Amortization of discount on investments (1,107) (836) (5,175) (1,354) Changes in non-cash working capital balances related to operations Accrued interest (119) (88) Accounts payable - contributors 2,378 (339) Actuarial requirements 20,749 19,828 Cash provided by operating activities 17,833 18,047 INVESTING ACTIVITIES Purchases of investments (39,974) (37,315) Proceeds from maturities of investments 25,179 15,441 Proceeds from sales of investments 7,453 Cash used in investment activities (7,342) (21,874) Net increase in cash during the year 10,491 (3,827) Cash and cash equivalents, beginning of year 1,563 5,390 Cash and cash equivalents, end of year 12,054 1,563 See accompanying notes E!J ERNST & YOUNG -----A-me-m-Ix>-r-fir-m-of-Er-n~-I &-you-no-gl-otla-l-lim-it-eq

6 The financial statements of the City of Ottawa Sinking Fund [the "Sinking Fund"] have been prepared by management in accordance with accounting principles prescribed by the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants. Since a precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements necessarily involves the use of estimates and approximations which have been made using careful judgment. The following is a summary of the significant accounting policies: Contributions are recognized as revenue in the year receivable. earned. Interest revenue is recorded when Investments are purchased with the intention of being held to maturity. Gains and losses are recognized when investments are sold. If there has been a decline in value of investments, other than temporary, the investments are written down to market value. Under certain circumstances, investments may be sold prior to maturity in accordance with the approved Sinking Fund Investment Policy. All investments are initially recorded at cost and are adjusted annually for amortization of discount or premium on the basis of the effective yield as determined at the date of purchase with the amount of such amortization included in interest revenue in the fund balance statement of continuity. The provision for actuarial requirements of the Sinking Fund for the year represents the amounts levied during the year as set out in the Sinking Fund debenture by-laws plus interest accrued thereon capitalized at specific rates compounded annually in accordance with Paragraph 1 of Section 409(2) of the Ontario Municipal Act, The actuarial requirement is to accumulate to an amount sufficient to pay the related debentures upon maturity. The excess of revenue over these requirements for the year is included in the fund balance. The Sinking Fund considers any highly liquid investments with an original maturity of three months or less to be cash equivalents. ill ERNST & YOUNG -----A-m-em-be-'-li-'m-o-' E-",-"-&-yO-Un-Q-G'-oba-'-Lim-j-Ie<l

7 When certain Sinking Fund balances are more than sufficient to meet the principal amount of the debentures represented by the Sinking Fund accounts at maturity date, City Council may distribute such excess in accordance with Section 409(12) of the Ontario Municipal Act, Government of Canada Provincial governments and agencies Municipal governments City Other municipalities Other Amortized cost Par value Market value 2008 $ 28,243 55,676 37,394 20,071 40, , , , $ 40,454 48,455 38,480 19,592 26, , , , ACTUARIAL REQUIREMENTS AND INVESTMENTS FOR DEBENTURE RETIREMENT Balance at the beginning of the year Provision for actuarial requirements Balance at the end of the year 2008 $ 157,608 20, , $ 137,780 19, ,608 E!J ERNST& YOUNG A member firm or Ernst & YOU"'Q Global Limite<!

8 [b] Investments and cash equivalents held by the Sinking Fund comply with Ontario Regulation 438 of 1997 as amended by Regulation 655 of 2005 which prescribe the types of investments eligible for investment. Investments and Sinking Fund debenture commitments mature as follows: Par value Commitments Actuarial investments and at maturity requirements cash equivalents [in thousands] $ $ $ ,331 50,000 47, , , ,000 81, ,240 50,000 28, , , ,901 85,000 21, , , ,357 The weighted average yield to maturity on par value of investments held by the Sinking Fund as at December 31, 2008 is 4.69%. As of 31 December 2008, the value of the sinking fund account for by-law 126 of 1989 exceeded the amount required to meet the commitment when the by-law matures on May 31, 2009 by $2,378. The excess amount will be distributed to the City during 2009 after approval by City council. Ell ERNST & YOUNG A member lirm of Ems1 & YOUI'lQ Gtobal Limiteo